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Zebulon_Flex t1_j20pnog wrote

Why haven't economics "solved" the economy? Why do we still have recessions and bubbles? Is it even possible to completely prevent unwanted financial effects? Will there always be winners and losers in the economy?

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skywalkerze t1_j20xh23 wrote

One of the reasons is you can't do controlled experiments in macroeconomics. Can't start with 3 identical countries and try them with higher, normal and lower interbank rates, while making sure everything else is the same.

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atomfullerene t1_j26fq94 wrote

Also, if you did somehow figure it out and published your results, the traders and businessmen would read your papers and alter their behavior based on what you wrote....which would change the underlying behavior of the market and probably make your discovery invalid.

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Zebulon_Flex t1_j21utec wrote

That makes sense. Do you think that economics will ever be "solved"? Like with computer simulations or something?

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skywalkerze t1_j23cbiw wrote

"Ever" is a long time, but I don't think we will solve economics as it is defined today. Maybe if we reframe the problem somehow, and in the process change the way society deals with money and allocation of resources.

Another problem is that if it was "solved", who gets rich or poor would be predetermined and probably could be changed as we want. How could that work? Who would accept a system where the results of a lifetime of work are fixed and you cannot change them? Communism had a big problem with this, nobody bothered to do a good job at work, because it made no difference to your income or status or anything like that.

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lVivvracl t1_j22qzy0 wrote

You don't solve it, you can only manage it. Same reason it's called as Dismal Science. As long as we don't solve first the mystery of human brain, or we don't act like robots behaving in certain ways there will never be a perfect economy. Also, the economy is much more complex than having winners/losers. There's such thing as win-win situations such as renewable energy or lose-lose situations like natural disasters. Only Technology can "solve" or compromise with our economic problems.

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MrOrangeMagic t1_j2385t9 wrote

During history different kind of economic systems have been used, and we have now in our modern times found one which is until what we know the most effective in being managed, but also keeping up with the enormous economical growth.

It is that managing part which is the most important part, and you can see it fall apart the moment it does not happen. Like with corruption, bubbles, internal trading/communication and monopolies.

Economists all over the world are always trying to find improvements to the current model, or are even trying to create a new model. But a new model would require a mass transition which certainly not everybody would want or be prepared for

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